Mondi Half-yearly results for the six months ended 30 June 2016

• Continued strong financial performance on all key metrics
▪ Underlying operating profit of €529 million, up 8%
▪ Underlying earnings of 75.0 euro cents per share, up 11%
▪ Cash generated from operations of €620 million, up 15%
▪ Return on capital employed of 21.2%
• Capital projects continue to deliver growth
• Strategic acquisitions enhance packaging portfolio
• Interim dividend declared of 18.81 euro cents per share

David Hathorn, Mondi Group chief executive, said: “Mondi delivered a strong performance in the first half of 2016 with underlying operating profit up 8% to €529 million and a return on capital employed of 21.2%. We saw strong contributions from Consumer Packaging, Uncoated Fine Paper and the South Africa Division, partially offset by the anticipated price weakness in certain of our packaging paper grades. We continue to make good progress in driving growth through our capital investment programme. We are on track to deliver an anticipated €60 million in incremental operating profit in 2016 from recently completed major capital projects, and our projects in development remain on time and on budget. The Boards recently approved the first phase of a modernisation programme at our Štětí mill in the Czech Republic with follow-on investments still under evaluation.

In April 2016 we completed the acquisition of a corrugated packaging plant in Poland, and we have recently completed two acquisitions that will further enhance our product offering and geographic reach in the growing consumer packaging segment.

While we saw some price weakness in certain of our packaging grades in the first half, demand for these products remains strong and pricing has generally stabilised with increases recently achieved in certain grades. The second half will be impacted by planned maintenance shuts at a number of our mills and the usual seasonal downturn in our Uncoated Fine Paper business. Furthermore, we anticipate a lower forestry fair value gain than was recognised in the first half. We expect to continue to benefit from stable input costs and incremental contributions from our capital investment programme, together with the stability afforded by our downstream converting businesses.

While mindful of the heightened macroeconomic and political uncertainties in Europe, we remain confident of continuing to deliver an industry leading performance in line with our expectations.”

Group performance review
Our underlying operating profit for the half-year ended 30 June 2016 increased 8% to €529 million compared to the first half of 2015. We saw strong contributions from Consumer Packaging, Uncoated Fine Paper and the South Africa Division, driven by volume growth, pricing benefits and forestry fair value gains, respectively. This was partially offset by Packaging Paper, which was negatively impacted by lower average selling prices, and Fibre Packaging, which saw lower sales volumes and experienced negative currency effects.

Revenue was down 4%, primarily due to currency effects and disposals completed in 2015. Excluding these effects revenue grew 1%.

Like-for-like sales volumes were similar to the comparable prior year period, with generally stable volumes in the paper businesses and strong volume growth in Consumer Packaging offset by lower sales volumes in the Industrial Bags and Extrusion Coatings segments of Fibre Packaging.

Pricing movements in the Group’s key paper grades were mixed, with domestic currency selling prices significantly up in Uncoated Fine Paper, more modestly up in the South Africa Division, and down in Packaging Paper on the comparable prior year period.
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